Profit Taking May Resume, Amidst Month-End Portfolio Balancing, Volatility, Influx Of Q3 Numbers

Market Update for Week Ended January 26 and Outlook for Jan 29-Feb 2

Nigeria’s equity market during the past week closed lower for the first time this year after three straight weeks of up market when it ranked as the world’s best performing bourse, but witnessed a pullback as a result of massive profit taking activities which led to a back-to-back loss for four trading sessions. The week also witnessed a very high intraday volatility to create buying opportunities that supported reversal that halted the free fall of stock prices within the period under consideration on Friday.

The relatively lower prices resulting from the latest market corrections ahead of the earnings reporting season attracted repositioning by smart money, amid reshuffling of portfolios by investors in expectation of Q3 March accounts and full-year earnings reports for December year-end accounts that are around the corner. This led to the renewed “BUY” market on Friday as a result of price adjusting downward, with end of the month around the corner. There is also positive news of higher trade surpluses and higher crude oil prices on the back of a weak US$, in addition to news that Russia and OPEC (Organisation of Petroleum Exporting Countries) cartel plan to extend their production cut cooperation indefinitely on reports that inventories continue to drain.

The mixed sentiments at the close of the week’s trading indicates a gradual easing of selling pressure as stocks with strong fundamentals likely to continue experience reversal after attaining their new support levels, as strong earnings reports will support a new rally in the month of February.

Market correction within the period is already revealing buying opportunities as the fundamental strength of these companies support higher dividend payouts at full-year, knowing that 80% of the factors that influence stock prices (the market and economic fundamentals, which comes in form of liquidity and positive data), are still intact. The remaining 20% comes from company fundamental and earnings performance, both of which would become evident soon to trigger an uptrend, should the earnings be surprising and above expectations or appropriate sanctions if such numbers move in the opposite direction.

The All-Share Index for the period resisted to breakdown the psychological line of 43,000 which was becoming a new support level, such that any breakout may lead to 41,000 basis points. Market technicals were weak and mixed as trading volume was huge and breadth, negative to halt the three-week bull transition.

The NSE’s composite index shed all of 1,319.07 points to close at 43,773.76 points, from an opening figure of 45,092.83 points, representing a 2.93% decline on a huge volume, which was higher than previous week’s. These transactions were driven by activities in financial services and conglomerate sectors. Similarly, market capitalisation for the period closed lower at N15.69tr from the opening value of N16.15tr, representing a 2.87% drop, which was due to the listing of 67.801m shares of Nigerian Breweries on January 24, 2018. This resulted from a scrip dividend scheme offered to eligible shareholders of NB who elected to receive new ordinary shares in lieu of cash dividends with respect to the 258 kobo final dividend declared for the year ended December 31, 2017, bring the company’s total issued and fully paid-up shares now stands at 7,996,902,051 ordinary shares.

The top advancers table for the week was dominated by consumer goods stocks that had earlier suffered losses after breaking out their 52 week-highs on a high volatility, as profit taking slowed down, giving room to reversal on Friday, amidst huge volume likely to support a rally in this new week that brings the month of January to a close.

Mixed sentiments continued in the week under consideration, as market indices were correcting from the new highs as traders and investors booked profit from the recent rally in low, medium and high cap stocks, thereby reducing the NSE ASI’s year-to-date return to 14.46%. Market capitalisation growth for the period stood at N2.02tr, representing a 16.23% gain from the year’s opening value.
Market breadth for the week was negative with the decliners outpacing advancers in the ratio of 44:30 on a huge volume of trades to short-lived three weeks up market

International markets were lower during the past week, as the U.S Q4 GDP was revised sharply lower to 2.6%, as an annualized $652.6bn trade deficit offset strong 3.8% growth in consumer spending. The positive news is that the higher trade deficit was due to a stronger US$, and higher consumer spending could point to higher inflation going forward. President Mario Draghi of the European Central Bank (ECB) indicated that the zone’s economy still needs support to keep increasing inflation toward healthier levels following US Treasury Secretary comments on a weak dollar. In Asia, Japan’s rising consumer spending according to its central bank could translate to a pickup in inflation this year, just as China, expressed disappointment with new U.S trade tariffs.

Back home, the benchmark NSE Index opened the week on a negative note, losing 0.40%, a situation that continued till Thursday, shedding 1.16%, 0.96% and 0.99% respectively, before a reverse on Friday when it recovered 0.56%, bringing the week’s total loss to 2.93% on profit taking and market correction wave.
The NSE index and all sectoral indices closed lower for the period, except for the NSE Consumer Goods and NSE Oil/Gas that closed 2.15% and 0.08% higher respectively, while the NSE AseM remained flat for the week. The NSE Banking suffered the week’s biggest decline, shedding 6.40% in one week

Market activities for the week, in terms of volume and value were mixed as volume was up by 42.91% to 7.16bn shares from the previous week’s 5.01bn units, while value declined by 7.14% to N42.55bn from the previous week’s N45.82bn.
The best performing stocks at the end of week were Wapic Insurance and Dangote Sugar, which gained 10.91% and 9.80% respectively to close at N0.61 and N21.96 per share, due to full-year expectations with high possibilities of dividend payment, while Diamond Bank and Champion Breweries were the worst performing, losing all of 26.05% and 20.69% to close at N2.64 and N2.53 respectively, on the back of profit taking.

Market Outlook
As the new week is also month-end, we expect volatility and profit taking to continue in the midst of actual Q3 numbers hitting the market, even as the March accounts have just three more trading days before they start pay fines for breaching the NSE’s post-listing rules as it relates to timely release of their numbers within the statutory period. Early fillers of December accounts would start rolling in from February.
However, we would like to reiterate that investors should go for equities with intrinsic value, especially during this season when dividend payment is approaching.

We advise investors to allow numbers guide their decisions while repositioning for the rest of the year’s trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.
It is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk. For stocks that should be on your shopping list to buy in this seasonality changes as the year winds down, sign up to INVESTDATA BUY AND SELL signal setup by calling 08032055467.

Get your home study pack on INVEST 2018 Traders & Investors Summit and ride with the current recovery on Nigeria’s stock market and economy. By investing and trading knowledgeable. You can also still access stocks analysed in the home study pack of the INVEST 2018 traders & investors summit, which includes 15 stocks pick for 2018 are available now to guide your positioning as trading for the year just started.
Comprehensive training materials on stock Trading and Investing for Financial Independence series are Available, you can play and watch on your mobile phone, laptop, desktop and Tv. Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Attention! Attention!! Attention!!!

Investdata Consulting Ltd is organizing another workshop where experts would simplify market jargons with the aim of increasing understanding and increasing the pool of retail investors.
Theme: ABC of Technical Analysis for the Novices and Advance Traders
Have you traded the stock market before and failed? It is a known fact that about 90% of those who trade without knowledge and understanding of the dynamics will end up losing 90% of their capital most of the time. You don’t have to be one of them.
Therefore, when you attend this Practical ABC Technical Analysis conference, you would learn how to trade such that you become one of the lucky 10%, who manage to consistently play the market profitable by themselves through our SIMPLE trading strategies and buy & sell signal setup.

Consistency is the key to equity trading and investing successfully.
At investdata we have been teaching investors simple and proven strategies which when implemented makes you a successful trader and investor in any market situation, especially when it comes to equipping you well enough to know how to protect their portfolios and profit from market corrections in a recovering economy.
We have also, over time, focused attention on attuning the mindset of investors and traders to managing risk, while eliminating emotions when trading so as to avoid irrational investment decisions.

Attend the Practical Conference on Technical Analysis for the Novices and Advance Traders. We would be taking participants through:
• Understanding the momentum behind current equity movement and when to exit using SIMPLE Technical Indicators and Tools to avoid losing capital and profit.
• Our team of experts and time-tested resource persons will show you how you too can successfully and confidently trade and invest in stocks profitably on your own from your phone, laptop and/or desktop computer.

The workshop is scheduled as follows:
DATE: February 24. 2018
TIME: 10am – 3.00pm
VENUE: Ostra Hall & Hotel, Behind MKO Abiola Gardens, Opposite NNPC Gas Plant, CBD, Alausa, Ikeja. Lagos.

What you will learn at the Technical Analysis Chart Conference
1. The 3 Simple trading secrets that can help anyone succeed at investing
2. The tenets of stock trading and investing Using TA
3. Trading and investing strategies that will help you manage your risk, protect your capital and profit from market oscillation.
4. How to trade on your own online.
5. The psychology of trading and investing and how it will make you successful.

Registration is ongoing
There will be sales of stock trading and investing materials at the end of the conference, Fundamental and Technical Analysis materials, including home study packs you can play and viewed on your phone, laptop and television set. All at 20% discount for attending. You need to prepare yourself and profit from the market and the recovery economy to truly achieve your financial independence and freedom in this New Year.
For more enquiries about the programme, please call 08032055467, 08179547605, and 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd
info@investdataonline.com
info@investdata.com.ng
ambrose.o@investdataonline.com
ambroseconsultants@yahoo.com
Tel: 08028164085, 08032055467
http://investdata.com.ng/2018/01/profit-taking-may-resume-amidst-month-end-portfolio-balancing-volatility-influx-q3-numbers/